Thomas S. Mackie v. David T. Guthrie--Appeal from County Court at Law of Smith County

NO. 12-01-00043-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS

THOMAS S. MACKIE,

 
APPEAL FROM THE

APPELLANT

 

V.

 
COUNTY COURT AT LAW OF

DAVID T. GUTHRIE,

APPELLEE

 
SMITH COUNTY, TEXAS

Thomas S. Mackie ("Mackie") appeals the trial court's order granting final summary judgment and award of attorneys' fees in favor of Appellee, David T. Guthrie ("Guthrie"). Mackie raises three issues on appeal. We affirm.

 

Background

Guthrie was the owner of one hundred percent of the outstanding capital stock of Reliable Gas Company, Inc. ("Reliable"), a Texas Corporation. Guthrie, who was interested in selling the assets of Reliable, was approached by Mackie, who, at the time, was a representative for Redmond-Derks, L.L.C. ("Redmond-Derks"). On November 14, 1996, Reliable and Redmond-Derks entered into an agreement whereby Redmond-Derks would introduce prospective buyers to Guthrie as a representative of Reliable and if Reliable was sold or if a similar business arrangement was entered into between Reliable and such a prospective buyer, then Reliable agreed to pay Redmond-Derks five percent of the purchase price (the "Redmond-Derks Contract"). Although Guthrie executed this agreement on behalf of Reliable, it is unclear whether the Redmond-Derks Contract was ever executed by a representative of Redmond-Derks. On March 6, 1997, Mackie delivered a new intermediary agreement containing almost identical terms as the Redmond-Derks Contract (the "Mackie Contract"). However, the Mackie Contract omitted reference to Redmond-Derks and listed the parties as Reliable and Mackie. (1)

In July 1997, Mallory Propane Company ("Mallory") entered into negotiations with Reliable for the purchase of its assets and the purchase of Guthrie's Smith County real estate. (2) However, the discussions did not bear fruit and on August 11, 1997, notice was sent to Redmond-Derks terminating the Redmond-Derks contract. Following the termination of the Redmond-Derks Contract, Mallory attempted to renew its previous negotiations with Reliable.

On January 20, 1998, Mackie filed for Chapter 7 relief under the Bankruptcy Code. (3) Guthrie was not listed as a creditor in Mackie's bankruptcy. The Mackie Contract was not listed in any of Mackie's bankruptcy schedules as an asset of Mackie's estate. Further, Mackie's bankruptcy Schedule G indicates that Mackie claimed no executory contracts.

Following Mackie's bankruptcy filing, Guthrie entered into negotiations with the owner of Mallory, Stanley Mallory, individually, for the sale of Guthrie's stock in Reliable and the sale of Guthrie's home. Negotiations were successful and Guthrie and his wife executed and delivered to Stanley Mallory a contract for the sale of certain real property including approximately 8.375 acres of land, which was owned by Guthrie as his separate property. The sale of the aforementioned real estate and Reliable stock by Guthrie to Stanley Mallory was closed on March 31, 1998.

On October 14, 1998, Mackie submitted written demand to Stanley Mallory for $40,000.00, and provided a copy to Guthrie. On November 16, 1998, Guthrie received a demand letter from an attorney acting on behalf of Mackie for $40,000.00. In response, Guthrie filed the instant lawsuit seeking a declaratory judgment determining his liability, if any, arising under the terms of the Redmond-Derks Contract and/or the Mackie Contract. Guthrie asked the court to declare the Mackie Contract void, unenforceable, canceled, terminated and/or non-existent because (a) it was executed under false pretenses, (b) Mackie failed to perform pursuant to the terms of the agreement, (c) the agreement was terminated by written notice on August 18, 1997, (d) Mackie was judicially estopped from asserting the existence of any rights or claims under the terms of the Mackie Contract, and/or (e) the contract, if any, was not assumed within sixty days of the date Mackie filed Bankruptcy. Mackie filed an original answer asserting a general denial and a counterclaim against Guthrie for $40,000.00 and attorney's fees alleging that he had earned his commission upon his introduction to Reliable of Mallory, which had purchased Reliable's business for $800,000.00.

During the course of discovery, Guthrie served Mackie with requests for admission, to which Mackie failed to timely respond. Subsequently, Guthrie filed a motion for summary judgment and a no-evidence motion for summary judgment. Mackie failed to timely respond to Guthrie's motions and after a period of approximately three months, the trial court entered an order granting final summary judgment in favor of Guthrie and dismissed Mackie's counterclaim. (4)

 

Justiciable Intersest

In his first issue, Mackie claims that the trial court erred in granting summary judgment in Guthrie's favor because Guthrie, who was not an interested party to the Mackie Contract, had no justiciable interest under the agreement. Mackie claims that Reliable, as the party to the Mackie Contract, is the only party with a justiciable interest. Although at first glance, Section 37.004 appears to set forth a subject-matter jurisdictional hurdle, which could be raised for the first time on appeal, it has been held that "the Uniform Declaratory Judgments Act, Tex. Civ. Prac. & Rem. Code 37.001-.011, is not a grant of jurisdiction, but 'merely a procedural device for deciding cases already within a court's jurisdiction.'" Chenault v. Phillips, 914 S.W.2d 140, 141 (Tex. 1996), citing State v. Morales, 869 S.W.2d 941, 947 (Tex. 1994); Texas Ass'n of Business v. Texas Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993). Thus, Mackie's claim is not jurisdictional.

A pleading contending that the plaintiff is not entitled to recover in the capacity in which he sues is required to be verified by affidavit. See Tex. R. Civ. P. 93(2). Parties who do not follow the mandate of Rule 93 waive any right to complain about the matter on appeal. See Nootsie, Ltd. v. Williamson Cty. Appr. Dist., 925 S.W.2d 659, 662 (Tex. 1996). In the case at hand, Mackie's answer does not raise such a defense, nor is his answer verified by an affidavit. Thus, we conclude that Mackie has waived his right to raise the issue on appeal that Guthrie is not entitled to recover in his individual capacity under the Uniform Declaratory Judgment Act. Mackie's first issue is overruled.

 

Summary Judgment Evidence

In his second issue, Mackie contends that the trial court erred in granting a declaratory judgment in favor of Guthrie because there was no summary judgment evidence of any agreement to which Mackie is a party. Generally, a non-movant to a motion for summary judgment who fails to respond, may not raise disputed factual issues on appeal. See Yancy v. City of Tyler, 836 S.W.2d 337, 341 (Tex. App.- Tyler 1992, writ denied). However, the movant must still establish its entitlement to a summary judgment on the issues by conclusively proving all essential elements of its cause of action as a matter of law. See City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex. 1979). Consequently, a non-movant needs not respond to the motion for summary judgment to contend on appeal that the grounds expressly presented to the trial court by the motion are insufficient as a matter of law to support summary judgment. Id. Mackie divides his second issue into four separate sub-issues making 'no evidence' legal sufficiency challenges to the trial court's findings. Each of Mackie's sub-issues will be addressed individually below.

Mackie first argues that there was no pleading or proof of any agreement between Mackie and Guthrie in Guthrie's individual capacity. Mackie reiterates the distinction between Guthrie individually and Reliable, arguing that it was erroneous for the trial court to find that there was an agreement between Mackie and Guthrie "suitable for a declaratory judgment." Mackie's argument simply rehashes the same contention raised in his first issue, which we have held was waived by Mackie's failure to properly raise this issue by verified pleadings pursuant to Texas Rule of Civil Procedure 93(2).

Mackie next argues that the trial court's finding of any agreement involving Mackie is erroneous because Guthrie failed to make the Mackie Contract part of the summary judgment record. However, in its order granting final summary judgment, the trial court specifically found that "the summary judgment evidence supports and establishes as a matter of law that the contract (if any existed) between Plaintiff and Defendant was terminated by written notice on or about August 18, 1997...." Thus, the trial court did not make a finding that there was a contract. Rather, the trial court found that the existence of a contract was immaterial because if indeed a contract did exist, it was subsequently terminated.

Mackie further contends the trial court's finding that the agreement between Plaintiff and Defendant was terminated by written notice on or about August 18, 1997 is unsupported by any competent summary judgment evidence. Mackie's basis for his contention are twofold. First, Mackie reiterates his argument that there was no contract with Guthrie in his individual capacity. We reiterate that Mackie has waived this issue on appeal. See Tex. R. Civ. P. 93(2). Second, Mackie contends that the written notice referred to by Guthrie is not attached as an exhibit to his affidavit and that Guthrie's statement that the agreements were "terminated" is a legal conclusion that will not support summary judgment. However, there is evidence that "any agreement between Mackie and Guthrie or between Mackie and Reliable was terminated by written notice on or about August 18, 1997." Such evidence took the form of a deemed admission, which is competent summary judgment evidence. See Tex. R. Civ. P. 166a(c). Thus, despite the fact that no written notice of termination was attached to Guthrie's affidavit, there existed competent summary judgment evidence to support the trial court's finding on this issue.

Mackie finally contends that there is no competent summary judgment evidence concerning what effect, if any, Mackie's bankruptcy had on Guthrie's (or Reliable's) rights in this case. Mackie's argument is apparently based on the contention that the evidence regarding bankruptcy disclosures, which was set forth in deemed admissions, is not competent summary judgment evidence because of Guthrie's failure to define the term "Intermediary Agreement-Seller." However, a review of the request for admissions in conjunction with the attached bankruptcy schedules, specifically, Schedule G, clearly demonstrates, despite the absence of a definition of the term "Intermediary Agreement-Seller," what the effect of Mackie's bankruptcy was on parties' rights in this case. 11 U.S.C. 365(d)(1) creates a statutorily deemed "rejection" of an executory contract in a Chapter 7 case if it is not assumed within 60 days of bankruptcy. The effect of that rejection is a breach of the underlying agreement. See 11 U.S.C. 365(g) (West Supp. 2001); see also In re National Gypsum Company, 208 F.3d 498, 505 (5th Cir. 2000). In the case at hand, Schedule G of Mackie's bankruptcy requested a description of all executory contracts (5) of any nature. Mackie indicated, under penalty of perjury, that he had no executory contracts. Moreover, there is a deemed admission to the effect that "Mackie did not assume any agreement with [Reliable] or Guthrie within the time required by 11 U.S.C. 365(d)(1)." Thus, the effect of the bankruptcy evidence on Guthrie's and Reliable's rights in this case is clear. By his failure to denote any executory contracts on his bankruptcy Schedule G coupled with his deemed admission (6) that no agreements whatsoever had been assumed within the time period provided by 11 U.S.C. 365(d)(1), Mackie, as a matter of law, breached his contracts, if any, with Guthrie and/or Reliable. Therefore, Mackie's final contention on this issue is without merit. Accordingly, Mackie's second issue is overruled.

 

Attorney's Fees

In his third issue, Mackie claims that the trial court erred in awarding attorney's fees to Guthrie because Guthrie had no justiciable interest, and thus, was not entitled to a declaratory judgment. As set forth above, Mackie has waived this issue on appeal. See Tex. R. Civ. P. 93(2). Mackie's third issue is overruled.

Accordingly, the judgment of the trial court is affirmed.

 

LEONARD DAVIS

Chief Justice

 

Opinion delivered September 5, 2001.

Panel consisted of Davis, C.J., Worthen, J., and Griffith, J.

 
(PUBLISH)

1. In his original petition, Guthrie pleads that although his signature appears on the Mackie contract, he does not recall ever signing such an agreement.

2. While Guthrie does not seem to directly contest the implication that Mackie had a hand in bringing Reliable and Mallory together for the purposes of negotiations, Guthrie alleges in his original petition that he and Stanley Mallory had been acquaintances for many years.

3. Mackie's bankruptcy case is styled In re: Thomas Sterling Mackie, Debtor; Case No. 398-30556-RCM-7; in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division.

4. Mackie does not challenge the dismissal of his counterclaim on appeal.

5. The term "executory contract" generally includes contracts on which performance remains due to some extent on both sides. H.R. Rep. No. 595, 95th Cong., 1st Sess. 347 (1977). The aforementioned definition, the "Countryman definition," was expressed as follows: "a contract under which the obligation of both the bankrupt and the other party to the contract are so far unperformed that the failure of either to complete performance would constitute a material breach excusing performance of the other." Countryman, Executory Contracts in Bankruptcy, 57 Minn. L. Rev. 439, 446 (1973); see also 3 Collier on Bankruptcy 365.01[1], Page 365-17 (15th ed. 1989).

6. We note that Request for Admission Number 6, on which our analysis is, in part, based, does not make use of the term "Intermediary Agreement-Seller," which Mackie complains is not defined.